Mortgage rates in the U.S. have hit their highest level in more than a year, making homes more expensive for purchases who seek to finance their new abodes. 

The rates on 30-year-fixed mortgages jumped nearly .25 percent to 3.81 percent this week, according to mortgage lending giant Freddie Mac. This is an increase of 15 percent from the record low of 3.31 percent set during November of 2012 and the highest rate since May of 2012. The 30-year rate dropped as low as 3.35 percent in early May. 

 

The rates for 15-year fixed mortgages also spiked t0 2.98 percent, representing an increase of .21 percent. 

 

Prospective home buyers unhappy with these increased rates can blame it on Ben Bernanke, the chairman of the U.S. Federal Reserve. According to Keith Gumbinger, an executive with a premiere mortgage information company, “Bernanke’s comments left the impression that the central bank’s stimulus policy might start to be pulled back, perhaps as early as this September,” said Gumbinger. “This announcement influenced the spike in interest rates as investors worked quickly to adjust their positions.”

The stimulus policy, in which the Federal Reserve purchases up as much as $85 billion a month in U.S. treasuries and mortgage backed securities, has kept interest rates close to zero by providing a willing buyer for loans. If the central bank pulls the reins on their purchases, buyers will likely demand higher yields to pick up the slack, which will push interest rates up.

 

Bond yields, which are utilized to track mortgage rates, have risen even faster than mortgage rates. The 10-year Treasury is currently at 2.12 percent or .45 percentage points above its April level. 

 

As rates continue to rise, the number of loan refinancings will invariably decline. Refinancing applications dropped by 12 percent week over week, representing the largest single-week drop in 2013. That said, mortgage rates will probably have to climb much righter to have a significant impact on buyers. 

 

Mortgage rate increases over the past month have only added roughly $20 to monthly mortgage payments for every $100,000 borrowed. However, the increase in rates ultimately limits how much buyers will bid on homes, which in turn, dampens home values. 

 

 

Source: whitehouse.gov

Roughly 11 million Americans depend on federal disability payments; however, the system is on the verge of running out of money.

According to a government report, the Social Security Disability Insurance program is expected to run out of money in its trust fund sometime in 2016, years before both the Social Security and Medicaid programs. If this happens, the revenues coming into the program would only be enough to cover roughly 80 percent of the payments owed to the disabled and their families.

The trustees of Medicare and Social Security will release an update on the status of the disability program later this week. The annual report will also offer new estimates for the exhaustion of Medicare’s hospital fund, and of Social Security’s retirement fund, which is currently set to run out of funds in 2035.

Although the disability program is the smallest of the three, it will be the first program that Congress has to address. That said, there is not much agreement regarding the entitlement reform in Washington these days. Attempts to cut Medicare spending have been nothing short of futile.

The Social Security actuaries have developed two ways to bring stability to the disability program. The easiest solution and one legislators have agreed to in recent years, is to divert a larger percentage of the Social Security payroll tax to the disability program and away from the general retirement initiative.

Currently, the combined rate paid by U.S. employers and workers is 12.4 percent. The disability program’s rate is 1.8 percent, and the retirement system’s rate is an overwhelming 10.6 percent. Congress has the ability to authorize a larger share moving toward disability to 2.6 percent for two years and slowly wane this figure to 1.8 percent by 2030. This increase would allow the disability fund to remain solvent until roughly 2033; however, it would cut the retirement system’s lifespan by two years.

The other means, which is highly controversial, would be to increase the disability portion paid by employers and workers by 0.2 percent each. This increase would keep the program running for 75 years; however, there is little desire among legislators to undertake a tax increase.

There are a variety of reasons why the number of Americans collecting disability payments has skyrocketed to roughly 11 million from 8.7 million in 2007. The aging of the baby boomers is one of the primary drivers, along with more women entering the workforce. That said, many argue that Americans are taking advantage of the system, claiming it is too easy to procure benefits under the program.

Regardless of how we got here if Congress does not take action, the disabled population will have to make due with smaller payments.

Source: Congresional Budget Office

The SEC today charged a Washington-based commercial truck manufacturer for a number of accounting deficiencies that clouded the company’s financial reporting to investors during the financial crisis. The SEC alleges that PACCAR’s accounting controls included ineffective policies and procedures that kept the business from adhering to various accounting laws and rules. The company failed to report the operating results of its aftermarket business separately from its truck sales business as mandated under segment reporting rules, which are established to ensure that investors procure the same insight into a business as its primary executives.

PACCAR and one of its subsidiaries also failed to offer complete information regarding their respective loan and lease portfolios, and the company also overstated some lease and loan originations and collections and two of its foreign subsidiaries in its statement of cash flows. Both PACCAR and its subsidiary agreed to settle these charges.

“Companies are required to diligently monitor their internal accounting systems to ensure that the information presented is consistent and accurate with the relevant accounting guidance,” said Michael Dicke, the Associate Regional Director of the agency’s San Francisco Office. “The deficient procedures and controls at PACCAR caused glaring inconsistencies in its reporting and kept regulators and investors from seeing the company through the eyes of the company’s management personnel.”

According to the complaint, PACCAR is a Fortune 200 company that manufactures, designs, and distributes trucks and aftermarket parts that are sold under the Kenworth, DAF, and Peterbilt nameplates. From 2008 through 2012, PACCAR did not report the results for its parts business as a separate entity from its truck sales business. For instance, the company’s 2009 annual report showed $68 million in income prior to taxation for its truck segment; however, board materials and documents reviewed by senior executives revealed that the trucks business encountered a $474 million loss and the parts business procured a $542 million profit. By at least 2008, the company should have been reporting its aftermarket business as a separate entity in its filings, but failed to do so until the 4^th quarter of last year. 

 

Source: SEC.gov

The agency suspended trading activities of 61 empty shell businesses that are delinquent in their public filing and no longer in business based on an evaluation by the agency’s Microcap Fraud Working Group. Because microcap companies are rarely traded, once they become dormant they are susceptible to being taken over by fraudsters who falsely pump-up the stock to depict it as a healthy business and coerce investors into illegal pump and dump schemes.

In this review of microcap stocks, the SEC identified these shell companies in at least 17 states and one foreign nation. By suspending trading in these businesses, they are required to provide updated financial information to prove they are still up and running. This requirement essentially renders these businesses useless to fraudsters because they are no longer flying under the radar.

“Fraudsters crave empty shell companies that they use to conduct pump and dump schemes and procure illicit trading profits by defrauding unsuspecting investors,” said Andrew Cereseny, the Co-Director of the SEC’s Division of Enforcement. “The SEC will aggressively freeze trading in these shell companies to take away a crucial instrument of their trade and to rid our markets of fraudulent activities.”

Pump and dump schemes are common types of fraud involving these empty shell businesses. Perpetrators acting out these schemes will tout a thinly-traded microcap company through misleading and false statements regarding the company. Perpetrators then purchase the stock at a low price before driving the price higher by creating the appearance of activity and drawing investor interest. They then dump the stock for a significant profit by selling it to the market at a higher price once investors have bought into it.

“When a company ceases its filings and investors no longer have access to current information, there is no reason for that shell to remain exposed in our markets. Under this initiative, we are committed to identifying significant risks in the market and removing them to protect investors,” said Christopher Ehrman, the Coordinator of the agency’s Microcap Fraud Group.

Source: sec.gov

 

The fervent debate has lost most of its steam as the United States Supreme Court has rejected the premiere legal challenge and November’s presidential election snuffer out the opposition’s hopes for a late reversal. Come the New Year, every American in the country, will be required to carry health insurance or a pay a fine, as one of the last pieces of Obamacare falls into place. 

 

That said, for the 6 million residents of Massachusetts, the implementation of Obamacare will not mean a whole lot. In 2006 then-governor Mitt Romney signed a health-reform initiative that instituted a similar insurance mandate with strict rules for when employers must provide plans and the blueprint for a government online insurance exchange or marketplace. This plan, which was affectionately known as Romneycare, ultimately served the model for the national plan. 

 

Roughly six years into the Massachusetts healthcare experiment, residents have had substantial time and experiences to answer the kinds of inquiries you may be asking about the national plan: Will my premiums increase? Will my employer drop my insurance? Will my taxes increase? Will I face longer waits to schedule or see my doctor?

 

As a small state with a robust economy, the most doctors per resident in the nation, and above-average health care spending, Massachusetts is not a perfect indicator for the country. Moreover, the laws are far from uniform, and the state only recently began addressing the costs of care. However, the experiences of Massachusetts residents can still offer plenty of advice regarding what to expect on January 1st and what you should do to prepare for the new law change. 

 

Even before the law took effect in 2007, only 8 percent of Massachusetts residents were without insurance. The requirements, along with subsidies that make policies affordable, decreased the state’s uninsured population down to 3 percent, the lowest in the nation. The nation as a whole is expected to fall short of this milestone: by 2017, roughly an estimated 10 percent of Americans will still go without health insurance, down from 16 percent today. With less generous under Obamacare and some states reusing to expand Medicaid offerings, more impoverished Americans may go without insurance. 

 

Also, workers at large firms that offer generous health care packages will see no changes to their plans. In Massachusetts, companies that employ fewer than 11 full-time workers can refuse to provide health insurance, while larger firms can opt out of the requirements by paying a fine of $295 per employee. From 2005 to 2011, the percentage of businesses with three or more workers that provide insurance increased from 70 to 76 percent, according to a Massachusetts employer survey. 

 

 

Source: whitehouse.gov

 

The Securities and Exchange Commission charged a Rockville, Maryland-based proxy adviser Shareholder Service for failing to protect the confidential proxy voting information of clients participating in several proxy contests. 

 

An SEC investigation found that an employee of the serve provided a proxy solicitor with nonpublic information revealing how more than 100 advisory clients were voting their ballots. In exchange for this voting information, the solicitor provided the Institutional Shareholder Services employee with tickets to sporting events and concerts, meals, and airplane tickets. The breach was conducted in part because ISS did not implement sufficient controls over employee access to confidential voting information, as the employee charged gathered said data by logging into the ISS voting website from work or home and using his personal e-mail to relay the details to the proxy solicitor. 

ISS, which is registered with the Securities and Exchange Commission as an investment advisory firm, agreed to settle the charges by a $300,000 fine and retaining an independent compliance consultant. 

 

“Proxy advisers are required to tailor their controls based on the risks of their business in order to protect the integrity of the proxy voting process,” said the Deputy Chief of the SEC Enforcement Division’s Asset Management Unit, Mrs. Jule Riewe. “The Internal controls at Institutional Shareholder Services did not adequately address the prospective misuse of confidential voting information rendered by firm employees.”

According to the agency’s orders, the breach took place from 2007 to 2012; during this time, ISS failed to enforce or establish policies and procedures to impede the misuse of material and nonpublic information rendered by ISS employees. Specifically, the business lacked adequate controls over employee access to confidential client voting information.

 

The order found that ISS violated Section 204A of the Investment Advisers Act of 1940; the SEC order censures ISS and requires the business to pay a $300,000 penalty and take in an independent compliance officer to review the firm’s supervisory and compliance procedures and policies. The officer will evaluate whether the company’s procedures are designed to ensure that its voting services business adheres with the Advisers Act regarding its treatment of client information, interactions with proxy solicitors, and the transfer of gifts.   

 

 

Source: SEC.gov

 

U.S. stocks surged today as investors digested solid economic data that appeared to put the financial and housing crises in the nation’s rearview mirror. 

 

The Dow Jones Industrial Average closed the day at a record high of 15,409, after gaining more than 100 points, or 0.7 percent. The S&P 500 also rose 0.7 percent respectively, and the NASDAQ added a solid 0.9 percent. 

 

Moreover, the yield on the 10-year Treasury note surged above 2.1 percent, which marks the highest level in more than a year. Other signs pointing to a robust recovery are reports that housing prices rose better-than-expected at a clip of 10.2 percent during the first quarter. This marks the most significant increase since 2007 and helped bolster the entire housing sector. 

 

In a separate issue, the May reading on consumer confidence hit a five-year high today and jumped far more than expected. 

 

Central banks, including the U.S. Federal Reserve, have been driving the 2013 rally by buying up government bonds to control and push down interest rates and to entice investors to purchase more stock. Central banks in Europe and Japan signaled they were prepared to keep pouring money into their respective markets to keep rates low, even as signs continue to point to a strong recovery. 

 

Some notable price movements for U.S. stocks include Netflix, which slumped after the hyped new season of Arrested Development aired over the Memorial Day Weekend. Moreover, shares of the electric car maker Telsa, which is backed by billionaire Elon Musk, surged 13 percent, as it topped $100 for the first time in the company’s history. 

 

 

Source: whitehouse.gov

 

 Lululemon, the maker of yoga clothing, announced that its chief product executive was let go after last month’s see-through yoga pants debacle.

 

The Vancouver-based clothing company announced on Wednesday that Sheree Waterson, Lululemon’s chief product officer will step down on the 15th of this month after five successful years with the company. 

 

Waterson’s removal comes quickly on the heels of the company’s considerable recall of Lululemon’s popular black yoga pants in March of this year. Waterson’s removal is directly related to the botched production of the pants; as a result of the blunder, the company was required to recall the entire line of black, stretchy yoga pants that had an unacceptable level of sheerness. The pants hit the market with a sales price between $72 and $98.

 

The popular yoga pants were recalled because they were unintentionally see-through. The defective pants represented nearly 18 percent of all women’s yoga pants sold in the company’s store and prompted a severe shortage of the product.

 

Last month, Lululemon announced that the recall would significantly disrupt the company’s operations and ultimately damage its financial results. As a result of the defective production of the popular pants, the company expects first-quarter same-store sales to rise 5 to 8 percent in the first quarter, which is a significant drop from its earlier forecasts of an 11 percent gain. In total, the production mistake is expected to cost the company around $65 to $75 million. 

 

The company offered full refunds to individuals who purchased the pants. As a result of the botched production effort, shares of Lululemon plummeted, and the brand has not announced when the pants will be placed on shelves again. 

 

Source: CNN

 

 

Media mogul Jeff Berwick is hoping to bring Bitcoin ATMs to major metropolitan areas throughout the world within the next couple of weeks to months. 

 

Berwick expects to put the first two Bitcoin ATMs in Cyprus and Los Angeles in the next couple of weeks and is choosing between handfuls of different retail locations in both cities. Berwick added that orders for Bitcoin ATMs are coming in by the hundreds from a variety of countries all over the world. 

 

Bitcoin is a virtual currency that was created four years ago. Since its inception, the currency has generated a considerable amount of attention over the past few weeks. The value of the digital currency has surged in the wake of the fumbled bailout and bank-run in Cyprus and worries regarding the health of government-backed paper currencies like the dollar and euro.

 

A Bitcoin ATM will work like a traditional automated teller machine; however, instead of connecting to your bank account, the software Berwick and his team developed will convert cash to Bitcoins stored in your Bitcoin wallet or provide cash based on what is stored in your personal Bitcoin account. 

 

Berwick plans to charge approximately $10,000 to ATM operators to maintain the machines; fees then will be split with said operators. Berwick expects fees to hover around 3 percent, which is slightly higher than what most Americans pay to get cash from ATM’s outside of their banking network. 

 

Thus far, Berwick has used his personal savings to develop the machines and build out the first prototype. Berwick is currently hoping to raise between $2 and $4 million in outside investments to get more ATMs in the hands of operators. 

 

Berwick claims that getting a Bitcoin machine up and running should not be much more difficult than setting up a traditional ATM. In most cases, ATM operators are required to purchase the machine, pour cash into it and maintain network connections to accounts and Bitcoin wallets.  

 

The virtual currency market is rapidly expanding and ever evolving. At this time, Bitcoin users or investors can trade in their coins for cash through a number of websites such as BitInstant and Coinbase that work directly with banks to facilitate transactions. Moreover, some vendors are now accepting the coins as real currency, including the online community Reddit and the blog hosting site WordPress.

 

That said, the financial turmoil in Cyprus was the principal catalyst for the recent Bitcoin surge; and with seemingly no end in sight to Europe’s debt crisis, further financial problems in the Eurozone are expected. “If Cyprus happens in Spain, Italy or Ireland, more people will look to Bitcoin,” claims Berwick.  

 

 

Source: AP